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Target Holdings Ltd V Redferns

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INTRODUCTION
After Lord Browne-Wilkinson’s judgment in Target Holdings Ltd v Redferns, the principles of equitable remedy for breach of trust had remained muddled due to academic criticism of His Lordship’s judgment. It was not until the Supreme Court decision in AIB Group v Mark Reddler that “it would be a backward step […] to depart from Lord Browne-Wilkinson’s fundamental analysis” that His Lordship’s judgment was clarified, and the principles of equitable unriddled. One of the scholars that contributed to the confusion prior to AIB was Professor Charles Mitchell, by declaring that,
“Lord Browne-Wilkinson took a false step in Target when he introduced an inapt causation requirement into the law governing substitutive performance claims.”
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The difference between substitutive performance through falsification and restitution is that falsification is not based on a breach of fiduciary duty; substitutive performance is based on the steward’s failure to comply with the terms of his authority.
Substitutive performance functions in the same way restitution functions: the steward (or trustee) is ordered to restore the trust assets regardless of loss incurred. However, the difference between a steward’s failure and a trustee’s breach is that if the trustee cannot offer restitutive compensation of the misapplied funds because it is impossible, the secondary right of the beneficiary is “pay sufficient compensation to the trust estate to put it back to what it would have been had the breach not been committed.” This secondary right is known as reparative compensation. Hence, the main difference between accounting and equitable compensation
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Lord Toulson started his impressive judgment in AIB by declaring “the stitching together of equity and the common law continues to cause problems at the seams.” Whereas Lord Browne-Wilkinson followed McLachlin J’s non-fusionist approach in Canson, Lord Toulson preferred a fusionist approach in AIB, contending, “the extent of equitable compensation should be the same as if damages for breach of contract were sought at common law.”
Scholars pointed out that fusing equitable and legal remedies is somewhat undefined because there is no clear set of legal remedies remedies. Therefore, what is meant by fusion is that the same remedies should apply when equity and common law wrongs are effectively the same. Lord Neuberger contends that simplicity and clarity of the judicial system is his “mission statement for the UK Supreme Court,” whereas Lord Millet disagrees with fusion. Although there are two opposing views among scholars and the judiciary, AIB interprets Target to support fusion of equitable and legal
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